U.S. cotton spot markets experienced a sharp rally in early July. For the week ending July 9, the average spot price across seven designated markets surged 347 points week-on-week to 72.98 cents per pound, well above the prior week's 69.51 cents and 14.7% higher than the 63.64 cents recorded a year ago. This marks the largest weekly gain so far this crop year, signaling a clear upward shift in the price floor.
Price Jump Decoupled from Volume
Notably, the price rally was not accompanied by active spot trading. Weekly volume plunged to just 1,732 bales, down 55% from 3,865 bales the previous week and 36.8% below the same period last year. This divergence suggests that the price increase is primarily sentiment-driven from the supply side rather than genuine demand. ICE December cotton futures rose 3.8% on July 7 to hit an 80.63-cent settlement, the highest since June 2, but edged lower later in the week, indicating limited follow-through buying.
On a crop-year-to-date basis (since August 1), total spot volume reached 1.522 million bales, up 54.7% from 983,983 bales a year earlier. This implies that a significant volume of old-crop cotton has already been absorbed, reducing available inventories. Weather disruptions and logistical bottlenecks could further tighten deliverable stocks, supporting sellers' pricing confidence.
Regional Crop Conditions Diverge
The USDA's July 6 crop progress report showed that in the Southeast, Alabama's squaring rate reached 64% and Georgia's 63%, with boll-setting at 22% and 14%, respectively. Crop ratings were mostly good. However, Texas presented a stark contrast: in East and South Texas, cotton grew under muggy heat, with fields ranging from flowering to cut-out stage; bolls in the Lower Rio Grande Valley were already cracking, and whitefly pressure was high. Producers there are preparing for harvest.
In West Texas, Kansas, and Oklahoma, conditions remained dry. Daytime highs ranged from 95-102°F, with nighttime lows of 60-79°F. Scattered rainfall ranged from trace to 1.25 inches, but many areas remained parched. Some fields were also hit by high winds and hail. Dryland cotton fields are progressing but require sustained rain. This east-wet, west-dry pattern could lead to uneven final yields and add uncertainty to new-crop quality and delivery timing.
Mill Procurement: Cautious and Selective
Mill inquiry remained subdued. Domestic mills mainly sought cotton with color grade 42+, leaf grade 4+, and staple length 35+ for Q3-Q4 2026 delivery, but no trades were reported. Yarn demand was slow to moderate, and buyers remained highly cautious, avoiding inventory build-up at elevated prices.
On the export side, inquiries from Far East agents were moderate but focused on discounted bales. Demand from India, Pakistan, and Vietnam dominated the Southwest region's offshore interest, but actual volumes were limited. In West Texas, traded bales of grade 31+, leaf 3+, and staple 34-38 fetched 72.75-73.00 cents/lb (FOB truck/rail), while mixed bales of grade 13+, leaf 5+, and staple 34-38 traded at 68.00-70.00 cents/lb. The widening spread indicates buyers' preference for lower-grade, cheaper cotton and limited willingness to pay premiums for high-quality fiber.
Market Outlook and Recommendations
In the near term, U.S. cotton spot prices have upside support from low old-crop stocks, weather uncertainty, and technically firm ICE futures. However, shrinking volumes and cautious downstream demand cap the upside. If August rains improve or Far East buying remains sluggish, prices could face a correction. Conversely, if drought persists or logistics worsen, the 72-cent level should provide strong support.